Day: 17 November 2023

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European Central Bank says: Signs that the global economy is fragmenting into competing blocs

European Central Bank

Fear or Fact?

European Central Bank President Christine Lagarde on Friday 17th November 2023 reportedly said that Europe is now at a critical juncture, with deglobalization, demographics and decarbonization looming on the horizon.

Fragmentation

‘There are increasing signs that the global economy is fragmenting into competing blocs’, she said at the European Banking Congress, according to a transcript.

Focusing on Europe, she said that a continuous decline in the population of working age looks set to start as early as 2025, alongside climate disasters that are increasing every year.

Her answer to these shocks was that massive investment would be needed in a short space of time, requiring what she called a ‘generational effort‘.

Barriers

‘As new trade barriers appear, we will need to reassess supply chains and invest in new ones that are safer, more efficient and closer to home‘, Lagarde reportedly said.

‘As our societies age, we will need to deploy new technologies so that we can produce greater output with fewer workers. Digitalization will help. And as our climate warms, we will need to advance the green transition without any further delays‘.

Paving the way for AI?

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Retail trouble – UK sales hit lowest level since 2021 lockdowns

UK retail spending slows in October 2023

Shoppers bought less food and fuel in October 2023 as they were hit by rising living costs and poor weather, according to ONS data.

The volume of products sold last month fell by 0.3% to the lowest level since February 2021 when large parts of the UK were in Covid lockdowns. Retail sales had been expected to grow in October 2023.

The Office for National Statistics (ONS) said fuel purchases may have been ‘affected by increasing prices’.

Demand for other goods was also lower, the ONS reported.

The CNBC/NRF Retail Monitor, which tracks card transactions, also reported a drop in consumer spending in October 2023, with retail sales, excluding autos and petrol/diesel, falling by 0.08%, and core retail, which also removes restaurants, declining by 0.03%. 

The report suggested that the consumer took a spending break ahead of the holiday season, amid rising inflation, supply chain disruptions, and labour shortages.

UK inflation presented a bigger drop in October 2023 than expected – this will likely drive higher retail spending through the holiday period.

Higher pay and lower inflation will provide a lift through the Christmas 2023 holidays.